Pre-Brexit uncertainty sees a -46% drop in retail and leisure property activity levels in July 2016 compared to July 2015

The picture across Great Britain

Britain’s shop vacancy marginally increased to 12.4% in July from 12.3% in June. Annually this is down -0.6% from the same period last year (July 2015). This change was driven by fall in the number of new units in July of -3.5% and a 44% drop in the number of vacant units getting new occupiers.

Overall activity levels were down -46% in July 2016 compared to 12 months ago (July 2015). This is due to stakeholders in the property sector delaying major property decisions, such as new store openings, developments and conversions, in the lead up to the referendum in June. These impacts are now being evidenced in the LDC data.

GB Shop vacancy rate 2008-2016 (Source: LDC)

Vacancy rates by property type in July 2016 (Source: LDC)

Analysis of vacancy rates by occupation type compared to the previous month shows that Shop vacancy in July was 12.4% (+0.1% change), Leisure vacancy was 8.1% (0.0% change), and All (Retail & Leisure) vacancy rate was 11.2%( +0.0% change).

All Vacancy rate by location type (retail and leisure)

Shopping Centres

The GB shopping centre vacancy rate (13.3%) dropped by -1.6% in July 2016, when compared to the same period last year (July 2015). GB shopping centres saw the biggest drop across all the location types for the second consecutive period. Scotland (-2.6%) saw the biggest fall in their vacancy rates across the GB nations and regions. Wales was the only area to see a rise in its vacancy rate of +0.8% in the last 12 months since July 2015. This is a recurring theme, with Wales seeing a 12-month increase in vacancy in every month of 2016 so far.

Retail Parks

Retail park vacancy rates dropped by -1.0% across GB retail parks in July 2016. The North East saw the biggest improvements, with a -2.8%, decrease in vacancy in the 12 month period (July 2015 to July 2016), significantly better than any other region. The South West was the only region to see an increase in its retail park vacancy rate, with a +0.2% rise in the last 12 months from 5.1% to 5.3%.

Town Centres

The town centre vacancy rate increased by +0.1% in July when compared to June, to 10.8%. In the last 12 months, the vacancy rate dropped by -0.5% from 11.3% in July 2015. Scotland was the only region/nation to see an increase in its vacancy rate of +0.7% in the last 12 months (since July 2015). The South West saw a no change in its town centre vacancy rate, when compared to 12 months ago. With the increase in the South West’s retail park vacancy rate, and no fall its town centre vacancy rate the region may be showing early signs of a slow down in new occupiers growing in the region.

Vacancy rates by location type in July 2016 (Source: LDC)

Matthew Hopkinson, Director at LDC commented:

“July’s numbers are significant when you look at the 12 month view and see what impact the political and consumer volatility has had over the last two months. The net result has been a freeze in normal activity levels which are mirrored in many other areas of the economy.

The marginal increase (0.1%) is NOT significant especially when one considers the all time peak of 2012 being 14.6%. The UK ‘high street’ is evolving and does not require saving. What it desperately needs is to be understood and have clarity as to what is the most relevant purpose and role for the location, demographic and local economy it serves. Be it Blackburn, Burford or Banbury, they are all very different and at different stages in their evolution. The digital age has accelerated the changes and made the need to understand change at a local level more important than at any time in the history of our retail places.”